EU 2010/11 Wheat Prospects

Early ideas on cereal production prospects for the coming season are now starting to filter through. Of course, unlike their North and South American counterparts, EU farmers don't realistically have the luxury of soybean planting to fall back on. So with barley prices offering even poorer returns than wheat, and no intervention crutch to lean on next season, here growers are caught between a rock and a hard place.

Strategie Grains have released their first production estimates for 2010/11 this week, and are pegging the EU soft wheat area 1% higher, and output up 3% to 133.7 MMT in the coming season, aided by better yields.

They increase human and industrial usage by 2.1 MMT, or 3.6%, to 59.6 MMT. Of that an increase of 6.1 MMT, or 21% comes from the biofuel sector. In the UK, consumption from this sector is seen trebling, up 0.85 MMT, to 1.25 MMT.

It may not have escaped your notice at this point that UK biofuel usage of 1.25 MMT is equivalent to one Ensus running at full-tilt for the entire year. There are assorted imponderables here, like what about Vivergo you might well ask. Their website still says "first product expected Summer 2010". Of course we've heard that one all before, but there must be a pretty good chance they will use something in 2010/11? Additionally of course, it can't be easy to predict how close to full capacity Ensus will be able to run at, before the magic button has even been pressed.

Despite this increase in human & industrial use, Strategie Grains see EU ending stocks almost 24% higher at 22.4 MMT, up by 4.3 MMT. This is on the back of a 2.6 MMT decrease in feed usage to 50.0 MMT.

The bottom line there would seem to be that even if Vivergo opens on time and immediately shoots up to full capacity, EU ending stocks will still be substantially higher at the end of 2010/11.

The EU barley area is seen down 7%, and production falling by 6%, to 58.2 MMT. That's a decrease of 3.5 MMT. Despite the fall in output, ending stocks are seen up slightly to 12.8 MMT, largely due to the large carry-in of intervention stocks from the current 2009/10 marketing year.